RPRX - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Royalty Pharma Second Quarter Earnings Conference Call. I would now like to turn the call over to George Grofik, SVP, Head of Investor Relations and Communications. Please go ahead, sir.

George Grofik

Good morning and good afternoon to everyone on the call. us Royalty joining XXXX second for results. you to Pharma's review quarter Thank

the our of release slides can press You find with royaltypharma.com. call the at for on earnings Investors website page our this and results

you used Moving statements. to to that and our statements SEC presented results to information may unknown forward-looking differ would statements on I our financial risks, help and based this from contains other any involve to forward-looking on remind Pharma, cause of to earnings file factors you call the that to you Royalty on in performance, that with update With X. reconciliations available a non-GAAP Slide Slide for I release refer these like GAAP the known these and uncertainties our All materially be risks. X. we XX-K please such and in actual forward-looking are the website. financial are description that, to currently no to press Non-GAAP provided obligation information understand assume statements. to available will advance measures

EVP, will Our the & Marshall after Executive and Financial of Urist, Head review financials. provide and Pablo the Research today which discuss Pablo a Chief the Coyne, will Founder key Officer; will and Marshall EVP, Terry Officer. call speakers Legorreta, update Terry on Chief Investments; are highlights portfolio

Chairman our the I'd from Pablo. remarks also that, call Vice Hite, concluding Pablo, the Following will to Chris Q&A a we over hold turn And session. join will to like with session. Q&A

Pablo Legorreta

life which are our all summarizes choice, ecosystem. business. our sciences, quarter innovation am everyone in and of call. the leading quarter, funder course life portfolio another partner of delighted innovative report X and strategy George, the to the welcome achievements of again the of momentum I second you, the in as excellent Slide in Thank our strong execution on in to financial sciences on

[Technical receipts record adjusted XX% First, double-digit growth. we in Difficulty] of track our delivered cash growth impressive

which have royalty-based just strong transactions the year-to-date, end. billion acquisition, quarter funding we completed of innovative Trelegy Royalty demand the solutions. we Second, after for reflects announced $X.X growth in including the This

positive to accelerate And walk Third, shortly. Pharma. across Pfizer's Marshall Biohaven creation you value saw progress proposed our will Royalty through of will acquisition we this portfolio.

we addition, pleased In intranasal to the asthma as of we as in the have acceptance regulatory this see -- zavegepant important of This were in important PTXXX FDA today. potentially closer migraine. bring well milestones filings

of face existing year, cash remind our detail. estimate achieve In The I quarter. a our in we exchange am growth our the top-line. double-digit more exchange impressive our the in impact full-year the that and guidance based that roughly arrived professional is is which top-line positions strong a top-line. delivered measure our which for see also This X% on that pleased an excludes us momentum addition We that expenses Royalty. impact adjusted EBITDA On our by about non-GAAP also year reflects to I make XX% by a the deducting important the second top-line, we performance negative our Adjusted report this expect little And receipts XXXX. a foreign grew from financials in X% XX%. in operating to would talk from we expect EBITDA top-line Terry now remainder over had more to of investments portfolio Below minute. at we quarter, and us, X% foreign XX% another performance in of you you the Lastly, the can of growth guidance impact growth. Slide X, any to X% unfavorable of to to we will raising XXXX. was you Trelegy to our strong underlying X% that

adjusted our line flow by cash bottom grew XX%. our Lastly,

So felt growth with been strong Slide even track the that our the clear double-digit quarter IPO XXXX. execute in exchange X, have industry. foreign strong ability since all successfully another reflect against our of headwinds metrics, to of track across and across top-line record non-GAAP This June business growth key power shows record our strategy. our of of our our impressive model

this example portfolio. many absorb An innovating further most able of in some identify our of we're growth model. companies. key Trelegy you portfolio biopharma often at to diversification and this on is can unique most losses to heard for They most advantages a As They therapies our XX industry. is to consistently of and the receive a Blockbusters with scale the diversify possible compounding transformative unique add investment. course portfolio. recent not solutions we our our Investor by exclusivity capacity of of drive and enhance number and of of portfolio, of our X Slide deploy cash our heightened shown important is Day Pharma. Royalty our May ability market to that therapies bring in the element They to funding flow focus and of typically that leverage have replenishing our blockbuster attribute way and

Lastly, products. to different build across come Today, streams a our profiles. they blockbuster quarter provide from different portfolio strong with stages foundation risk continue of of to our a around development

portfolio. sales. list our on sales to the reduce to will compared these of identifying drive the XX of XX end portfolio on to has and we're portfolio products Constantly With XXXX, market our portfolio transformative end update blockbusters $X have we adding to this portfolio more greater exposure marquee top-line able potential grow Marshall added fact, companies. therapies. that, of to our our times and hand have four replenishment, portfolio, it ultimately billion future to based around risk, the than diversify XX generate top and value. X.X continued and the products I our potential billion. In $X over than have we Since business, blockbusters means you to to to Furthermore, This market in biopharma our this add sales continue

Marshall Urist

Thanks, Pablo.

chronic leading time. Let's by Trelegy leading therapy a a with a triple for combination respiratory been is disease GSK, marketed company the Slide presence move to asthma we XX. disease. obstructive is for in in had medicine pulmonary and It's tracking some

status, high Our therefore it's be to the interest highly complex need impressive and first-in-category parties transaction win-win on as Last unmet Royalty patient Theravance delighted Pharma and our together In transaction. to Trelegy. to no were GSK this royalties task Innoviva, the in clinical Royalty milestones. in acquire were to growth to acquire creative restructure a combined involved for parties upward royalty a $XXX was potential multiple This relationships Trelegy data, between total brought of Royalty's tiering Pharma execute global agreed and which to we strong reflected since ability Theravance all launch. month, GSK. creating simple solution acquisition X.X% to previously on a split of $X.XX billion on sales for stream up and Trelegy everyone based the sales, able million XX% the deal, deep entire paid industry between upfront Innoviva. and

Trelegy easy and controlled both for Pharma last in penetration cash this least expected but XX Trelegy blockbuster deliver not device, we Royalty triple noted, $XXX growth are in enhance approved COPD initial as our the blockbuster and maintenance opportunities why market sales months, high-single the to target poorly by receipts adding as long-term In indication, so approximately significantly inhaled asthma. our portfolio Both billion a XX%. opportunity to by for the year-over-year therapy with our million the The range. incidence diseases device Pablo establish was patients. at to returns helped FDA For another ahead. XX and and a to the growth adjusted to GSK expands double-digit low triple single to treatment adds the XXXX, excited reported by use Slide Trelegy compelling grow the our therapies very single in profile combination of transaction and be for first therapy. of with $X to the growth efficacy consistent the respiratory of we only representing approved returns high of on Trelegy global

therapies we an I we want project note $XXX excluding will XXXX. on in XX, the we to month, outside believe approximate On compared million sales precision acquisition to represent exceed oncology is RET royalty to doubling attractive million in $X.X marketed territories Trelegy billion of Roche. RET that the the in upfront will and to This sales would for Greater a return, cancer be expected forecast receive in royalties those high-teens highlight the to Slide Europe, and international altered Gavreto XXXX. there In non-small Greater lung In rate markets. decision with cell based in is forward, an on by penetration is medicine, increased targets expansion significant in cancer our still on the mutations China of Blueprint acquire thyroid in and Gavreto entitled year-end. is mid-XX%s $X.X certain scope by markets. of is reported by consensus and a Last markets, sellside ex-U.S. sales-based regulatory in sales for billion and approved sales which up This We $XXX Medicines royalty Gavreto. in milestones. Looking growth China triple U.S. very agreed in on U.S.

extending million we contributor is royalty Pharma. by expected has exceptionally not royalty stream, to territories an $XXX with to duration expect Royalty be in potentially to XXXX. the be an this the as over Gavreto far as Consequently, lifetime sales blockbuster Gavreto long approaching a Although, consensus XXXX, Roche of important

is proposed of our to investments in returns Moving Pfizer's Biohaven Slide on to accelerate XX. acquisition significantly expected Biohaven. various the

do based subsequently biotech highly the therapies. equity acquire of it development be We acquired, accelerate in with to with company of however, and migraine the When have so this Biohaven. is the we from organic and assessment returns their their to Biohaven had potential and on launch prospects. has partners, case royalties and our a we longstanding looks partnership the If successful CGRP

the a amounts Royalty payment return the This of with sales early investment to and Pfizer times approval. X% Following we $X.X from currently royalty XXXX, potential on Pharma to is returns Nurtec million zavegepant which our as assumes the accelerated cash much to acquisition, as the to the upside total an mid-XXXXs. on X% cash of closing to expected $XXX expect further also billion, zavegepant X.X which blended in milestone

reasonable billion it's the achieving a of to in addition commercial portfolio, migraine resources, the could marketing exceed greater peak Pfizer's BioHaven's Pfizer full believes of likelihood potential which assume of sales. With $X

and now over XX Slide clinical expected events move and portfolio our to XX months. months for Let's next the XX to regulatory the

In news with settings, results X a number in from different of readouts Cabometyx the over and immunotherapy of for balance we therapies, combination of to arthritis. from transformative up four terms rheumatoid XXXX, cancer, clinical Astellas Xtandi prostate in potentially in anticipate In including Phase Alzheimer's, in Phase including Pfizer important oral programs IBD. and Roche's few GSK's in we X non-metastatic anticipate BioHaven's Tremfya in XXXX, readouts in and gantenerumab otilimab zavegepant migraine a

regulatory the approval cancer zavegepant would the in on of on XXXX, XXXX, the we asthma. highlight in and in on over FDA we expected anticipate migraine front, thyroid and European decision the failure. heart In FDA in remainder on approval Gavreto PTXXX On intranasal decision decisions Omecamtiv

of potentially well advancing major the care many to outlook. growth and represent these milestones opportunities as commercial of As standard add our significantly long-term for could patients,

Finally, in the on drug I'd like touch portfolio. pricing impact our briefly to of reform

view small any patient access. final, many what that we initial we I'll volume changes would to considering to to potentially it the hand improved in implementation, have from our still over and seen is remained that, be from with is legislation, nothing and very proposed a in With the important While only business our there anticipate increase respect Terry. could unknowns headwind without

Terry Coyne

Marshall. Thanks,

XX. prior and the adjustment Xtandi, X% ago we to second Slide from grew the royalty, move a drivers benefited proceeds quarter in quarter included cystic the Growth which fibrosis which July Tremfya royalty Let's in acquired versus in the Total year the period. XXXX. franchise period

from Biohaven legacy HIV from the growth royalty We competitive of Slide positive from from and related flow Cabometyx, and Evrysdi on CLL in contribution partnership slower the slide also These Imbruvica saw and receipts well our year-over-year offset as more market recovery in as significant Orladeyo. shown to loss franchise, declines shows how than translated though Promacta a XX adjusted quarter. second strong this contributions our to the pressure. our cash factors specifically from not

million for As metric you're arrive a This receipts quarter. quarter, after us, with growth cash last interest. aware, $XXX non-GAAP at non-controlling year's to we which adjusted second XX% compared deducting key the is amounted in of

this quarter. As despite earlier, was a mentioned from in the X% FX estimate we X% growth achieved to headwind

adjusted of column, receipts. cash and the approximately were down cost move we As professional operating X%

As a top-line. consequence, our adjusted growth quarter, we the consistent reported XX% EBITDA in the in in growth with

of non-GAAP then flow once of financial noted, -- the for $X.XX again the important are which our billion As the three adjusted XX% an of or and our is bottom cash the $XXX which the interest redeployed we of we notes, of $X.X in adjusted which quarter, resulted payments generated think and an funding the paid of second us one share performance. other generated by highlights value efficiency one million in paid. model. This non-GAAP our EBITDA for -- measure key interest stage enhancing quarters. be adjusted cash modest per the After quarter. business received margin When business look We the of unsecured adjusted measure for XX%, ongoing on in Pablo new royalties, our third de reflecting to payments metrics items development first EBITDA we line to flow, by cash minimis interest timing semi-annual and into net less we

now and move XX Let's our Slide to position. financial

cash continue dividends the as marketable cash of Adjusting year, marketable our billion for just financial We in so billion. maintain increased by on was and acquired heard This well than million the at securities distributions. payment net to forma as and transaction, June. pro acquisitions our generation and We our of would've end firepower. strong $X.X as capital a Royalty on more $XXX half upfront position the in million Trelegy the quarter that first the securities offset deployed been of cash $XXX significant $X.X over end, this from to we $X.X cash. Marshall, billion for flow After you royalty

basis, our EBITDA stood net pro On EBITDA. X.Xx total debt debt leveraged to X.Xx the forma at same to and

acquisition X%, the our As the above teen average high-single-digit our fixed which in rate target is on compares returns percentage coupon range. with slightly a Royalty reminder, to debt on

of put billion the the momentum us We While XXXX, and plan matures an XX%, interest shareholders. business. six On XXXX guidance. be range our delivered now last in rates generation our business we on majority create the beyond. model over raising our position the the our to strong Slide in have certainly XXXX months, to and to full-year adjusted value moved substantially an billion X% And higher or business over flexible cash in execute for debt excellent are in financial XX, of $X.XX billion, increase expect receipts $X.XXX to cash between our $X.X we of highlighting in

with QX, final I help highlight factors modeling. to Looking royalty our specifically want for to a quarter. few the second payment received to DPP-IV in substantial We your the

quarter, acquisitions. And on product the and future the this high a Soliqua $XX take Lastly, today, account of as in a million line standard we into net our of with other payment year. does portfolio milestone Royalty last base as will experience third any consistent comparison based not is on recorded guidance practice, our

now receipts We to XXXX. professional to X% costs in X% cash be approximately payments of costs. for operating our to adjusted expect and Turning operating

reflects Our which think one of inflationary of still lower to for relatively around our is XXXX is impressive model, aspects $XXX environment. especially is full-year paid expected the base. guidance million. operating unique fixed today's Interest of light low this in cost We our highly be cost business

with going for recent we're allocation exercise the purchase through deal Finally, Theravance. our price

well will and and royalty raised which as royalties expected for behind the of growth The but performance -- and On guidance. expected expected This that outlook top-line strong primary adjusted particularly the our third to third our wanted payment XX, driver stream, enhanced which strong CF Evrysdi, franchise, is we expensed offset P&Ls. further our Trelegy million is Tremfya are expirations $XX of on this our various to quarters. partially is growth illustrative, our provides the year as the underlying cash graphic will in addition related expectation pushes The the drill and in are DPP-IV on the XXXX. the HIV by Our Royalty the our the be of Imbruvica pulls, down to portfolio. underperformance portfolio, receipts Slide I current of fourth be upfront development is both non-GAAP of diversified ampreloxetine R&D quarter in GAAP and

the for to broad by is addition, dollar of X% assuming impact current In to the and year. year minus strength expected remainder U.S. between growth the million for the minus million $XX rate FX negatively X% or of the $XX

portfolio in X% royalty top FX many guidance to business significant the model. back able be our year in raising from We expected companies are to this a or I grow resilience that, closing well to of diversified prior two top-line industry XX% now that LOE achieve Not to be as streams, to business his once the highlighting pleased our to the our headwinds. comments. faces as to again, hand pressure for would growth Pablo call characteristics With have like our with

Pablo Legorreta

Thanks, Terry.

strong another we're results track in quarter to So excellent XXXX. deliver on and

a close, moment executing plan, we our plan, highlighting clear we deliver to I enhancing detailed I Before at spend the consistent confident strategic will rapid, wanted we're Day. By this and against growth. value Investor which

pillars. on Our based strategy is five

approved development third-party First, acquisitions capturing in select of late-stage opportunities. a leading for share Royalty products

Second, both approved typically we help development-stage products biotech royalties R&D partners commercial created fund what synthetic acquiring term newly launches. and to on royalties and

streams. which solutions we allows pillars additional provide funding pillar to in payment royalty development the transactions. will return facilitating royalties acquire and fourth partners our we us and Cutting of is multi-faceted to through strategy, launch of for where us Third, each have a across enables these form tailor individualized capital, for which like M&A, corporate

adjacencies, elements result a XXXX, which plan. we're our capabilities. pillar, M&A shows is of another $X My to across that strategic five In of recent slide on deployed the of leverage fifth In four all IPO, the as synthetic year-to-date, all of capital Trelegy have we Lastly, we in a $X.X identify synergistic team's deployed final strategic delivering since billion we including and our royalty MorphoSys our transaction, billion across pillars. which the added pillars, acquisition existing deal. XXXX, five opportunities

towards it questions. billion we described. our growth that we take strong billion to Although, of a position we to five-year and two months attractive capital of has in happy execution the our that, target great our only us $XX since move $XX With strategy your as puts been to compounding Investor deployment Day, the would be deliver profile achieving

George Grofik

questions. please the take to question. the We'll now open Operator, call first your

Operator

[Operator you. Thank Instructions].

Our from with first question Goldman comes Chris Shibutani Sachs.

You proceed. may

Chris Shibutani

thank I Good congratulations on morning updated and that second do Marshall your think not focus the of the in about I sizable, in you're second, biologics. you. potential of you you us current proactive and Can Can implications believe following team's the impact more continued versus on timelines on mention calendar exposure Two quick since appreciate questions. assessing proposals, molecules the Trelegy, and made based differences about the help you this during investment pricing on the capacity particular, then, comments one progress. how year? how U.S. largest about that is small think reform. And that you opportunities deals further industry comment with appreciated your IPO. about comments if the One, the the durability drug upon of of to

may further investment your that comments you defined be how changes you. share if Thank on However calculus. that could any

Pablo Legorreta

as drive you. know, questions. you in I growth of that and synthetic will I'll which outlined the royalty Thanks I there's of the Good brief, very, our significant. driving think opportunity just I've is no Maybe the for significant going pillars business is that continue forward onto is the very front us, strategy Marshall. hear to very and Sure. that it to think question But pass

continue company significant this them essentially So the amounts of to creative very of fund and figure how choice partner to have needs innovation. the really are biotech with capital ways. And we work very to in of

for capital that company. capital our this For are ideal structures development new example, with launch and

diverse dozen, this And time, will lot consistent in things half a that, larger that the is goals the we in very with all give a maybe should a parties company more, can to space. that strongest of to maybe actually people different have Theravance deployment. fairly and complex and a in So maybe don't together take like a by on it align year, patient skill, that core because that skill addition per be and transactions marketed And transaction but Glaxo that focus product capital transactions, common marquee attractive, in of their to do Innoviva, difficult, a of result very been large us less of and that are there that innovations this. bring how for figure purpose one how maybe a lot obviously result of really or

give I'll the get years. those -- to us So in But very to why deals age. And M&A that's you. Marshall, This sorry, to its of opportunities additional it rare significant golden excited here. about next that. and guidance of kinds we're the like role capital, will important But on for we've really pass sort playing employee this very is industry

Marshall Urist

Pablo. morning. Sure. Thanks, Chris, good Hi

absolutely. So

So to commented a as beginning significant B can you pieces. a about Medicare to frame back we I the is impact. portfolio, power just legislation our I certainly that. of our think drug now a now. I about the We the important at will it's a we think the is of when from current reforming right and think turn that potential in that step like And D have mean, first two investments script immediately And we see exposure price do that look is in don't lot towards don't as we new think D, for that immediately. and the take

in the uncertainties might be from now are of as XXXX perspective. unknowns look it a things script, number negotiation impact as you how we when how beyond it implemented, and between and will least what change exactly I exactly at and a will see think the there mentioned like would

things. starting to are So think about those we

of think between B terms and calls, the the And some other on that. lots I earnings we've Medicare of D -- difference some You perspectives in of heard of duration. on the highlighted

think I is for include though the you'll those about of terms that we through potential start see So opportunities in and value future. the to how and that scenarios think in what we will think certainly

Terry Coyne

a for your And Trelegy then, capacity, $X.X mentioned would've question lot feel cash. financial so firepower. generates deal, The of business have Chris, our the each forma of And we We billion we on revolver, on have a we we $X.X cash which pro quarter. billion. -- capacity. we actually have like that of have lot And we is still then lot of a leverage

So nearly Trelegy for we represents would adjusted we pro mentioned be if around we leverage. forma sort as an could billion. EBITDA would that -- turn additional and of to we our the put we of deal X.Xx that And needed much at $X.X on be X.X as that

So really about ability to flexibility opportunity our plenty of feel good the we capitalize see. on that

Operator

One questions. you. for moment Thank

Chris Our Morgan. with J.P. comes Schott from next question

proceed. may You

Chris Schott

for much questions. so Great. Thanks the

we about business. still the think change of question I front. I you or can remind lot of with royalties, types had of this for you're about deals of how until rates story you biosimilar moving us cash, rate like you consider? larger kind potential either of sizes this about navigate to I that on so on guess there. second Tysabri higher environment timelines know higher just for time. of Thanks about think overhangs the you a talked product that's raising is remind Just some one that funded impact over a again questions rates rate and maybe in thinking has the for continue me. your you'd But first was and talk your terms guess not you in kind maturing in, two My about that And I I movement and debt, think at higher. as get deals the biosimilar how for we're all question I on much. the this environment we've of we competition post deals and do I investors know but XXXX. your think way just the competition us know

Pablo Legorreta

question for on why you and Tysabri. you don’t Marshall Chris. one the rates Thank interest the on questions, take Terry, the then

Terry Coyne

Sure.

it's It's this environment. in a having model our great question. growth non-cyclical rate Obviously, So environment. really attractive diversified rising the feel portfolio good is a very topical. business in a portfolio very of about We

base And environment. debt to then, very all of Our the we our in rates growth lock able that fact at fixed very were is really only lows attractive. non-cyclical historic low of this less pretty in cost is on portfolio also attractive with

so Our also I very to able rates our or it's then attractive. were that around less very all than with cost low we base at half fixed fact in lows on the is only historic And of it, XX% beyond lock data maturing pretty XXXX. think of

the we next when think rates, overall about a will have be obviously would -- over would and but if I refinance we couple -- at So think think do if that the rate the to it would years, we and business, way to the we think I maturities the prices the always impact be through higher on be on business we it that, we overall expect then would impact our we pay we're for the reinvesting our would assets. that trickle environment rising great about thing we And pretty is think about business -- that also immaterial.

long-term And the there in business. returns. can past And and of very very very attractive a the compounding that in we uncorrelated have to deliver confident natural is continue as nice deliver hedge we're sort we so

Pablo Legorreta

Marshall?

Marshall Urist

Tysabri. your then on question And Yes.

to think has to taking all, a just into continue fantastic of on and investment a back been think going be first Tysabri, it's step contributor So future. a the this I we for Royalty Pharma,

Sandoz the Polpharma been following course of We have for time. biosimilar some

is that seen we've this natural of recently the news so the with filing. the the acceptance evolution And of

at well, important a you as to the look you and the reflects So mind that of might end consensus in I comment impact through product biosimilar. think the on it decade, keep from is want to the thing significant Terry, certainly when a

in I diving that XXXX, over little So keep Biogen very on be continues their this the you to has property talked look here, a period already details through -- it's intellectual protect mind, over to clearly U.S. that through the when it's important But there that I expectations. in and in think certainly there. XXXX certainly deeper think bit patents in they'll

implications we'll so timing important when launch. updates how to and continue will the there But mind. other and biosimilar to keep for the things of there's And for in watch

and of that look of unique market with we interest and product. about are When is and only our patients. very history actually ramp safety is its our patients at on MS Also new at that actually Tysabri Biogen's a at very XXXX course sticky product First interesting were Tysabri important. analytics total data, and you of and which look a taken looked claims team the Tysabri with closely, a is XX% in we've profile Tysabri it's strategy is

sticky it really product like patients So is a this.

when So are our right you the seems there out. biosimilar that the therapy, knowledge. now -- biosimilar there's a Sandoz that unlikely multi-sourced markets most it's it how ways that on the one lot which then, a is only pretty is known be comparable patients many market, lastly, seen. think will ongoing play different to of this about of could And we've

aren't any certainly So clear there comps.

but of why phase see on if certainly for in this even Royalty to they and of there's reasons biosimilar we a investment So we'll when the approved, and be think launch, could might been a Tysabri are And when they wait has launches. resilient have Pharma. number great

Pablo Legorreta

several and ago, It's ago, four also And met five team difficult the or that license actually years manufacture. this years developed it. to we

So we're with quite the situation. familiar

George Grofik

the you. Thank take question. next Operator,

Operator

One moment for questions.

Flynn Terence next Our from with question Stanley. comes Morgan

proceed. may You

Terence Flynn

the comment first the half was of wondering the could year guess, top second of Two in of taking perspective. of you from for versus Thanks just second the this year of questions. funnel if from seeing me. you're I or year, opportunity terms what last a on Great. I half either half

seeing both to just so second so step selloff incomings. Trelegy And correctly you Trelegy. sure kind third then relates represent I the think that fourth my wondering percentage and in transactions just And if Biotech Thanks quarter deal those in XXXX I of and Given given to the the in up a was think royalties said this to just contribute then, that make things similar quarter announced question would clarification. you're Terry, revenues would guidance MorphoSys what of a much. to year, larger wanted I you'd heard July. but

Pablo Legorreta

Thanks the Marshall, the for Terence. and guidance. should on take the you Terry, funne, question the question on one

Marshall Urist

Sure.

Terence, hi, So, good morning.

in So in up of we've of funnel the you certainly think as increasing moved think as certainly things we're through is this at or top both even we've the the in terms about seen the of accelerating. of terms as been looking about of you things it. the in new have It year-on-year, -- number pace things momentum definitely year,

guards confidence a saying what of seeing. number So I think and we're that we're of things -- the the our under about and lot in opportunity

said our we've the our investment As and before, bar process same. remains

happen. as various parts pace stages. estimate to with happen talked things significant it they'll But about be to years about it's and will and we've our the coming So watching do things best important opportunities. working focus -- transactions transactions, as we're really most Pablo number number to asked have funnel There happen about really commented been they for you've multiple have going large with do things they excited And takes often in as of at and on at of them seen we continue very seeing strategy has we're I that or together and before, we're are to even we're number that transactions the of like -- are MorphoSys a opportunities. hard when you that have Trelegy, moving are they'll increased large what that always that a too. on large for as

we've as what to them seen. So happen pace to we you've They will happen. since do hard public, certainly sort expect always of or at been say exactly when continue but it to

Terry Coyne

And on Trelegy that's yes, correct. then

that in the will this and record We for third royalty so quarter of was. fourth receipts product, year that

George Grofik

we'll Thank you. question. the next take Operator

Operator

Thank One you. questions. for moment

Baum Andrew from Our with next comes Citi. question

proceed. may You

Andrew Baum

two you and questions, please. Thank

indeed Trelegy ask of first tied to particular the royalties other ties ever. on and generics? your complexity that up if is what reason face be The three that the time how for product dependent any doesn't obviously this to And as one share anticipated active the could inclusion very IP anticipated or it us a the is timelines So I ingredients the long just with royalty very, given impact the returns generics on an whether Could duration on streams you of therefore such Trelegy. terms. it's has

Pfizer then Second, not that the on your of for product. very was it the has on also in companies, second Chris, was is And Pfizer, buyer to synthetic and on given question much preferred Pablo biotech of you've you spoken noticed visibility commercial large the I not why GSK surprising. royalty, it knowledge outlook is obviously not Thank which have are hedge which that member. the large Trelegy focus royalties given there that and comments on dynamic, you. I'm PILOT risk company I Previously best curious a to going to Actually use trial, pharma, is the financing. are tempted obviously simply participated in. know alternative to now ways be synthetic and

Pablo Legorreta

that just hiring. and Yes. about question Maybe answer Trelegy I'll Glaxo

private I their bring one second And you not that they think able happened party the given for done time requires things able in to been in twice see interests. were they the royalty can wanted party I Gilead not was the from Gilead end, royalty is And and negotiate the transactions and in party, the together. and complex. party the to then we of go in in in Much make first together and be you the complicated impact. do that buy somehow of to were move not it's to understand ourselves this that wanted what it small bought similarly, And that are, tell But the give this their I another during highly, And case And we're an listen that of life. more listen Sloan-Kettering nimble three of same much see and with was was deals just going market years to Neupogen do we were directly never to align done the with time by sense. other things. the something contract contract royalty was those to A more we it's bought And on it. their partner as said, listen easy, there's is we understand bring transaction we that. for to able each to the the And is work this how one in for holder. to the CFO to difficult to complex. we doesn't in at the one. do to that which third party it creativity, are, from This And managed suited not comers, highly things Emory And are, decitabine to to do patients, my both. deal recall university -- worked then this transaction to can And we everyone. And case, we at emotions the never we middle is a on and us, then not for interest party They're the ground, U.S. said, all have never And a that like points that company sort ourselves. we And were the And there one to ex-U.S. party the where it recall been point. deal the ideally achieve be are going CFO and this I with the that the -- basically from that parties. Amgen. common were acceptable had to Company thing by achieve that's you. fact say, to it's we is and and has look, complexity I two other process able University. royalty this deal. that what we many it so interest, side. other second if just Gilead that want It goals motivations more much when I party, off And would actually someone we that. And if a with for the we would if would two any unreasonable. do to to would needed. able four how were to reason where guess I've And then Memorial that from And complex a terms said a ago. bigger acceptable the

answer it the there, to So other on I'll the of but question. stop Marshall to part pass

Marshall Urist

Hey Sure. Andrew, good morning.

am questions me don't So of I -- touch on If of them, there know. a I number are there. any please let if

The given various first one about was and complexity components the and duration Trelegy of the device. the

the detail So of cetera. we haven't XXXX. we generally gotten is duration of into our tremendous analysis, amount What our are et IP expectations middle of in have said

detail, how of those overall, we think outside the for it go. of XXXX will generally think piece -- Trelegy long through you in and I the are U.S., take U.S. more will we're to Trelegy the our maybe the XXXX happy but XX, in expectations end -- offline. the June So But the royalty

talked using we've with about R&D I pharma and partnership The companies. why you about question, about expect say does don't smaller and that other -- companies doing synthetic with large that we royalties think larger to asked working be

So on it has I way. emerging wouldn't certainly -- that lot of with companies. a interpret discussion think the I biopharma or the that smaller royalties biopharma synthetic focused

as we talk think that -- funding -- of times where in I environment the just those think about number that's a changing many in and companies those -- funding do a that the external we be modality, reflects think companies as our purely partnering is larger purely of either. be important But a that, of an do part that, to don't we think we synthetic royalties are with that, part doesn't going going companies, that to that. that not business that, imply the

think and that's part on to opportunities. those a our future. and But of the business create optimistic a have want and continue up again, to what are we to larger -- partner there and meet has our we be continue that, We on to in high the again, -- think going we and to companies they what want to be bar work

Pablo Legorreta

reflecting whole process process made the on wanted the I started, said, XX history it one some there where party just cannot was mean, during the also to companies, cannot wouldn't whole just and just on which that other even one this the of but I the thing of complicated, remembering give I I number door you -- transaction, up, tell conversations this you times no.

door I lot it and I open have that's just in and continue creative, what's we reasonable. be a we but talk stop -- can be persuade let's Let's this, actually so of like end, them I'll there. and experience can transactions the at and required said, discussion and to anyway, the And

Operator

moment questions. One for you. Thank

with Our next question Cowen. comes from Steven Scala

proceed. may You

Steven Scala

you. Thank Couple questions. of

full the changing. First, potential? Trelegy deemphasized that's wondering, there's some will ultimately respiratory Nucala, priorities Anoro, no how did underway some They've launches, mixed respiratory I'm its its that are shortage have of GSK. It's research become and just first Breo, question. been successful, recent less at changes comfortable So you attain so.

an you. programs to Second programs, Pharma innovator question step R&D for double fund on area. maybe curious acquire. down to other Royalty Thank if areas, small I'm words, decide D back or for whether and some passed and price opportunity on in is drugs on Part others In drug the when attractive if an and molecules companies that's and pair reform whether the terms vacate the bill

Pablo Legorreta

comments Chris see Thank very question, on of one product, Trelegy. I just the advertising, Marshall amount the that thing effort but personal my example, to behind to just own you you. for and amazing. marketing I sales it's take at the about should this Maybe and Trelegy, TV look question significant is this mean

a you to in with to do the support company Marshall, my answer? amazing the more to want Chris, add drug space, from this just think want but you is I leading go Chris, ahead? So great

Chris Hite

GSK's large Obviously, on We're It's that be and is part business, And sure. standalone in their and Trelegy forward. vaccine themselves to respiratory focusing pharma commitment the confident super of I Sure. health through Trelegy important very recently going consumer Chris. to yes, in off very a mean, their company most going transformation they've gone business. franchise. spinning GSK

very we're Trelegy. commitment their to confident So in

the given As what Marshall We're think them as the ultimate of obviously it that there's legislation both said, pharma maybe be, I large the not backing sure to relates reform, lot supporting pricing and pharma happen at could or R&D pricing. But around any. to potential at R&D business part a if still small biotech small will the cap part on of going and creation cap to pharma an a of We're of the be the with synthetic biotech and biotech engaged help ongoing big that'll in think going to business. our large royalties R&D today our is both forward. front. be conversations We

Operator

you. moment questions. for One Thank

Meacham from comes question of America. with Geoff next Our Bank

You may proceed.

Geoff Meacham

Hey that really bit carve just is been that the mean lot on the major structure perspective that synthetic it guys or that. it but some don't this is talk business. that about for raised event structure. Thank top sellers you well? give deals, synthetic goal at evolved line just a analyst in And the the as I but then question. of have has follow-up the given know strength to and more us of your the I policy had your And I morning. guys, is good dividends on capital here priorities. you a Thanks fall pretty payout royalty sure your just a hasn't it like -- Terry, wasn't guys bottom component a where guidance, reinvest, little consistently out I maybe you.

Pablo Legorreta

those Terry synthetic, Terry, questions. on Marshall. then the payout, and one other should take and you Marshall, The

Terry Coyne

Yes, sure.

the look capital as is create to the can we we the And committed the highlighted of there, time streams royalties. at area -- most clearly, share focus. said Investor But going that's we return that in continue to shareholders. by payout, royalty we clearly our Geoff. no increased XX%. north think or dividend on shareholders, -- year an additional We on new this That's our priority but then is quarterly for buying investing that could to we other dividend. a paying Day we're new that to last our we're year our repurchase sorry, and thing value to that where to over we We other So way long-term changes capital allocation focus -- is where

Marshall Urist

Geoff, hey morning. And good Great.

with has synthetic, synthetic I'd going wait over going part second much question. our patient, to But to that our say time the to the touched I'd disciplined, the approach going opportunities. question one So been do we've is and to we're we're be past overall that respect to right on we're to and approach very our appreciate building think that really to for on back we're an the we important themes wait of royalties is some of has business. characterized for, in come the this thing portfolio

or really lot a I where we finding So of don't launch or think build expect have sure Biohaven, do right come building mean seen meet and over we're market approach with us, to BioCryst, happen interest. I the we're that are that But bar put commercialized, to shortage build programs that doing something has the do that the so meet we there's everyone from that synthetics. opportunities. want as think and But that our later-stage of any and I conversations. you've programs portfolio that let are we're it time, us make we -- that them. continue the to all going multiple going think things to for I products think Immunomedics, our discipline development to of we apply portfolio is and Cytokinetics, with I the the into

Pablo Legorreta

just may whether a of We development We're royalty and royalty equity us. open-minded. deal, also the synthetics capital, If doesn't it can at to a day, like matter include or capital. royalty the a add I deal, launch not just companies end equity do and/or

insist open-minded way very are We to we or that other. one be the and don't has

to with I the the being best fact, what partners, say is to and solutions discussions like successful billion billion. from And of way think now flexible XXXX whole capital if offering companies, Biohaven us you if were would is at being potential $XXX of being I We a them look but Investor statistics in partner. Day, $X.X actually with results look In of that $X.X that in that to some you May very approach raised million. at XX their probably range develop our good a company fully we companies had about

smaller [Technical from Difficulty]. You $X.X Cytokinetics billion actually XXXX capital to $X BioCryst look XX% billion of at the of were XX% pharma. raised, amount we raised

of -- most question the is embrace it the it think I and it So really a of can place. of They we but Really our power we're programs. of companies like -- in companies, of is traction put way benefits they structures for their having where having the with And the are companies lot many something different market, particularly the to companies the getting a to benefits it. them we're we model understand can difficult educating lot that understand and a it now conversations. really right. them And things successfully of help very develop positive bring

going. how about very are to management think eager really understand I teams things optimistic are and unique I we're think what's

Operator

Thank questions. you. One moment for

comes DiFiore next question Our from Mike Evercore. with

You may proceed.

Mike DiFiore

Hi congrats thanks much squeezing in so continued taking the on guys, progress. my question and and for me

itself bit quick according seems on definitely decade a back IRR two but half to is Just seems IRR mediocre. -- ones. to in to royalty close the least a deal gap the CF of close the at seems the due the to One deal. the Trelegy It math LOE, the my the

know any the The you. prior we how you want given here. X all, of thoughts and about Separately, Investor wondering ampreloxetine. for add if should mentioned see the isn't rate color really giving expectations mid-single-digits could on your our Day, failure discount much Street your you are to calculations? credit but Phase So your Thank if in additional at And at what think this. I kind

Pablo Legorreta

Yes.

think seen we not so IRR, products at looking you're high-single-digit. of it's think that from again that own -- companies very like actually the understand maybe perspective it's happened But we've important is of dynamics dive analyst of that many, the important marketed more they're the and times like it's really I deep one to it over consensus either think mid-single-digit, what a by bigger or like I that, where the just, take forecast. your over growth the and And I to many So things is over products and the happen them. try the we like

about an the is And to think really our Our I it. to well. we're potential has tend this analyst assets that expectations, outperform so asset that expectations, excited do

that's IRR. So because of produces. strong is related answer it that very the flow this that is very cash one the to And leverageable obviously the

well. really So it actually balances

in we're other the is of about risk into CF CF, part take in you that that of maybe producing are goes talk The decade, right. to I our But our investing business, pass well beyond but but question flow on your because taking things where that I next decade and think it and do exploration more view I'll Terry the to didn't the not maybe near-term, to Terry IP the question? want get cash

Terry Coyne

Yes.

something can the -- you can think heard I Pablo. think I maybe different I question? you I Mike, the repeat -- -- than

that. about Sorry

Mike DiFiore

seems any good half due definitely just decade. the the in CF back that, deal Yes, I it all of the shortfall I that LOE receipt seems of saying because close That's itself very possible the was royalty to to no, saying. and kind was

Terry Coyne

Right.

Okay.

Mike DiFiore

Yes.

Terry Coyne

Yes. it. Got

Okay.

think about Pablo we So very that, we've products. in think low-double these we're of much it. what hopefully touched said there. we on some I really sort IRR the is that for we've this we is excited approved is consistent with range we're -- right think that -- high-single think what some potential What but that is targeted and upside And And with.

expectations also on take for a our Marshall had that? question you think to ampreloxetine. Maybe I wants

Marshall Urist

a so in Hey mind. to on couple Sure. ampreloxetine of things Mike, keep important Yes.

to of be -- our flexible try we possible. good Pablo we've constructive on, and always I as and and touched think try as all, first partners in all about, and as be as deals talked we

as -- why it's Trelegy -- part and that's was interesting transaction Theravance. large was so really of the to it include it broader with And really ampreloxetine very

what part data atrophy for keep the product, modest subset and very talked orthostatic important but a being multiple it's in about. product as is the we certainly more to hypertension That a of patients an has Theravance in So in interesting said, shown mind interesting deal. system of that some has with think large

and develops evolves. So certainly excited how program we're some as upside interesting that offer to the see deal could

George Grofik

the Thank you, Operator, we'll last question. take

Operator

One with question Verma UBS. you. Ash our comes And last moment. Thank from

may proceed. You

Ash Verma

question. Hi, for thanks my taking want on I had just -- one Trelegy.

represent the So safety for just more you would Does or amount in percentage typically a drove upfront template say? commercial the upfront than this what like deal? curious what that

Pablo Legorreta

you take can that Marshall, question, please?

Marshall Urist

Sure.

Ash, for thanks the question.

to about do, So the how sheet it is a of Analyst And structured certainly outlined we careful Day, on think very we the analysis blank as of each way it at we is, paper. that's we that, deal commercial both for And work a win-win of that evaluation yielded think find opportunity. with deal. that to approach a and our partners a I us. lot structure a the And deal was and Trelegy our the

Like So dynamic. I said specific different. that. has this should don't we've every take you its deal deal Every think necessarily or as a is template like anything

the like future and right additional that trying commercial structure find milestones a we'll there but for the where our future, partner an performance, here right specific royalty. again use some what's I'm based and sure So the on upfront to was always structure that we're in for structure?

Operator

I like to call you. further now remarks. to Thank any would turn for Legorreta the over back Pablo

Pablo Legorreta

its I up us Day call of Thank us think us, we goals. of also the and companies. through year year. outlined of golden of what our outlining the age to gone to delivering significant the as against incredible strategy, very, year sort in you front I'll do uniqueness, goals capital interest Royalty saying in partner growth. your deployed has with seeing its is And to time you, in operator, halfway We're out, this laid things, that deployment bring this business have and we want thanks by we on we're of Royalty $X.X very we billion what side the And recently and we our value how of companies Pharma, a terms capital are spent opportunity the why it's also we of of lot continuing innovation. by Investor just for funding, And close to and everyone ecosystem that had in those And Pharma.

So we're super excited.

we're of to with all partner choice Pharma continue answer of of Royalty clear we're think the coming And other time. you all over relationship the sciences. I is of to life And here innovators in the excited questions.

out -- today. to thank and you but for George So reach team, all anyone in listening the

Operator

This Thank you. participating. you today's Thank concludes call. conference for

You may now disconnect.

Royalty Pharma (RPRX) 4 Aug 222022 Q2 Earnings call transcript